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Struggling association hires corporate rescue firm
First Priority, the housing association censured by the regulator for a “fundamental failure of governance”, has hired special advisors to review its finances.
The association has appointed corporate rescue specialist Begbies Traynor and consultancy firm Grant Thornton, which is an external auditor to the National Housing Federation, as internal advisors.
First Priority, which has more than 700 tenants – all with learning, physical or mental health difficulties – confirmed to Inside Housing that these advisors will conduct a review of the association’s financial plan “in due course”.
A spokesperson for First Priority added: “We have initiated this as we want to present a robust plan to lenders and landlords that has been subject to scrutiny by external professionals. This is a standard approach in these matters.
“These discussions are confidential and ongoing, and it is not appropriate for us to provide a running commentary.”
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Inside Housing understands that First Priority met with its creditors on Thursday to provide more financial information, though the association said this was not the final outcome of the financial review.
One of the association’s creditors told Inside Housing: “All the [creditors] have taken a cautious welcome that we’re going to have detailed information during next week and so with the regulator involved, we feel comfortable to wait for that information to come through.”
First Priority owns no properties of its own, but leases from 26 different companies. Inside Housing understands that five of these own the majority of its stock. The association pays these companies inflation-linked rents on most of the properties it manages.
The Regulator of Social Housing placed First Priority under review in January and last month reported that it does not have “sufficient working capital” or the capacity to meet its debts when they fall due.
Inside Housing understands, however, that the regulator has not asked First Priority’s creditors to reduce the rent levels owed by the association.
Most of First Priority’s debts are not public knowledge, but the association is obliged to pay £3m in annual rent to the real estate investment trust Civitas, which has confirmed that all rents were received in full as of January this year.
Update: at 11.53 on 12.6.18 This story was updated to correct the annual rent figure.
